2021 (11) TMI 88 - AT - Income Tax

Exemption u/s 11 - denying grant of registration u/s. 12AA - whether the objects of the applicant are charitable in nature or not and genuineness of the activities carried on by the trust - HELD THAT - During the course of proceedings before the ld. CIT(Exemption), Pune, the appellant company was called upon to file certain information as to the details of expenditure incurred by it in the preceding financial year vide letter dated 13.08.2020 so as to enable the ld. CIT(Exemption) to form an opinion as to the genuineness or otherwise of the activities carried on by the appellant company. It is an admitted position that the appellant had not complied with the said notice for whatever reasons. However, keeping in view the difficulties being faced on account of Covid-19 pandemic, we are of the considered opinion that the interest of justice would be met if the matter is remanded back to the file of the ld. CIT(Exemption) to grant one more opportunity to the appellant company to comply with the notice issued on 13.08.2020 and with direction that the ld. CIT(Exemption) to decide the issue of grant of registration u/s. 12AA of the Act on the touchstone of the law laid down by the Hon'ble Apex Court in M/s. Ananda Social and Educational Trust 2020 (2) TMI 1293 - SUPREME COURT Accordingly, the matter is remitted back to the file of the ld. CIT(Exemption). Appeal filed by the assessee is partly allowed for statistical purposes.

Summary

Issues:
Appeal against denial of registration u/s. 12AA of the Income-tax Act, 1961.

Analysis:
The appellant, a trust formed to operate a Common Effluent Treatment Plant, appealed against the denial of registration u/s. 12AA by the Commissioner of Income Tax (Exemption). The Commissioner had requested expenditure details to verify the genuineness of the trust's activities, which the appellant failed to provide. The appellant argued compliance with all notices and contended that registration should only consider charitable nature and activity genuineness. The Commissioner, on the other hand, justified denial due to lack of satisfaction regarding activity genuineness. The Tribunal found the main issue to be the validity of justification for denial. Despite non-compliance, considering the challenges posed by the Covid-19 pandemic, the Tribunal remanded the matter to the Commissioner to allow the appellant another chance to provide the required information. The decision was to be based on legal principles outlined in the case law of M/s. Ananda Social and Educational Trust Vs. CIT & Anr. The appeal was partly allowed for statistical purposes, emphasizing the importance of complying with procedural requirements for registration under section 12AA of the Act.

Conclusion:
The Tribunal's decision highlighted the significance of fulfilling procedural obligations, even during challenging circumstances, such as the Covid-19 pandemic. It emphasized the need for trusts seeking registration under section 12AA to comply with requests for information to establish the genuineness of their activities. The remand of the matter to the Commissioner provided the appellant with another opportunity to meet the requirements for registration, ensuring a fair evaluation based on legal precedents.